RENDERED: FEBRUARY 18, 2022; 10:00 A.M.

NOT TO BE PUBLISHED

Commonwealth of Kentucky

Court of Appeals

NO. 2021-CA-0545-MR

DARRYL ISAACS AND

THERESA ISAACS APPELLANTS

APPEAL FROM JEFFERSON CIRCUIT COURT

v. HONORABLE AUDRA J. ECKERLE, JUDGE

ACTION NO. 16-CI-000250

FIREMAN’S FUND INSURANCE

COMPANY AND AMERICAN

AUTOMOBILE INSURANCE 

COMPANY APPELLEES

OPINION

AFFIRMING

**   **  **

BEFORE: CLAYTON, CHIEF JUDGE; CETRULO AND McNEILL, JUDGES.

CLAYTON, CHIEF JUDGE: Darryl Isaacs and Theresa Isaacs appeal from a 

Jefferson Circuit Court order granting the motion to dismiss brought by Fireman’s 

Fund Insurance Company (“Fireman’s Fund”) and American Automobile 

Insurance Company (“American Auto”). The Isaacs filed suit against the 
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insurance companies alleging bad faith, breach of contract, breach of fiduciary 

duty, and violations of Kentucky’s Unfair Claims Settlement Practices Act 

(“KUCSPA”) and the Kentucky Consumer Protection Act in their settlement of the 

Isaacs’ claims connected with a bicycle accident. Having reviewed the record and 

the applicable law, we affirm.

Factual and Procedural Background

According to his deposition testimony, Darryl Isaacs is the owner, 

manager, and vice president of a law firm, Isaacs & Isaacs, P.S.C. On January 19, 

2015, he was seriously injured when he was hit by a truck while riding his bicycle 

on River Road in Jefferson County. His wife, Theresa, alleged that she was also 

injured by the loss of her husband’s consortium and services. Soon after the 

accident, they demanded the $200,000 Personal Injury Protection (“PIP”) policy 

limits under their personal automobile policy issued by Fireman’s Fund. 

Fireman’s Fund paid the $200,000 PIP policy limits in a single lump sum in March 

2015.

The Isaacs brought suit against Michael Baumann, the driver of the 

truck. See Isaacs v. Sentinal Insurance Company Limited, 607 S.W.3d 678 (Ky. 

2020). Approximately one year after the accident, they dismissed their tort claims 

against Baumann in exchange for his full insurance liability limits of $1.25 million. 

Baumann’s policy limits did not cover the full amount of Isaacs’ injuries and 
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consequently he was considered an underinsured motorist (“UIM”) under 

Kentucky Revised Statutes (“KRS”) 304.39-320. Id. at 679. 

The Isaacs sought UIM benefits from the following insurers: (1) 

Fireman’s Fund, their primary auto insurer, whose policy afforded UIM benefits in 

the amount of $500,000; (2) American Auto, their umbrella insurer, whose policy 

provided UIM benefits in the amount of $1 million; and (3) Sentinel Insurance 

Company Limited d/b/a The Hartford (“Sentinel”) which had issued a commercial 

auto policy to Isaacs & Isaacs, PLLC, providing UIM benefits of $3 million. A 

formal written demand for policy limits was sent to Fireman’s Fund and American 

Auto on September 23, 2015.

On January 15, 2016, the Isaacs filed a complaint against Sentinel, 

Fireman’s Fund, American Auto, and their insurance agent. The complaint 

detailed how Baumann’s automobile liability insurance carrier had offered its 

policy limits in exchange for a complete release of the Isaacs’ claims, how these 

policy limits were not adequate to compensate the Isaacs, and how consequently 

Baumann was an underinsured motorist. 

In the complaint, the Isaacs sought the full UIM policy limits from 

Fireman’s Fund and American Auto. The complaint stated that they had made a 

demand for payment of UIM benefits from Sentinel which was denied. The 

complaint made claims against Sentinel for violations of KUCSPA and the 
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Kentucky Consumer Protection Act, for breach of contract and its fiduciary 

obligation, and common law and statutory bad faith. The complaint did not raise 

these claims against Fireman’s Fund or against American Auto.

Sentinel denied the UIM claims and the Isaacs sought a declaratory 

judgment from the trial court that Sentinel was obligated to provide UIM benefits 

under the terms of the commercial policy. The trial court granted summary 

judgment to Sentinel on January 24, 2017, on the basis that Darryl Isaacs did not 

qualify as an “insured” under the terms of the Sentinel policy. The Court of 

Appeals affirmed the trial court in an opinion rendered on February 2, 2018. See

Isaacs v. Sentinel Insurance Company, Limited, No. 2017-CA-000204-MR, 2018 

WL 663001 (Ky. App. Feb. 2, 2018). The decision of the Court of Appeals was 

subsequently affirmed by the Kentucky Supreme Court in an opinion rendered on 

September 24, 2020, which held that “[b]ecause Isaacs was not covered under the 

terms of the Sentinel commercial UIM policy, Isaacs could not prevail under any 

circumstances.” Isaacs, 607 S.W.3d at 682.

Meanwhile, Fireman’s Fund and American Auto answered the 

complaint, raising a series of defenses contingent on the fact that there had been no 

discovery yet in the case. The Isaacs propounded an initial set of discovery 

requests. According to the Isaacs, the insurance companies failed to respond 

properly to the requests and the Isaacs filed a motion to compel in order to obtain 
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more definitive information. Fireman’s Fund and American Auto agreed to 

supplement their answers, which they did on June 13, 2016. 

The Isaacs filed an amended complaint in June 7, 2016, adding claims 

for bad faith and additional contractual damages. According to the Isaacs, 

Fireman’s Fund and American Auto thereafter began making requests for 

information or documentation that had previously been provided to them and 

which in some cases was insignificant and unnecessary for any reasonable 

evaluation of their UIM claims. The appellants’ brief contains no references to the 

record indicating the content of these requests or why they were redundant or 

unreasonable.

On December 19, 2016, the trial court entered an agreed order to 

bifurcate the bad faith claim asserted against Fireman’s Fund and American Auto 

from the other claims asserted in the matter and all discovery on any bad faith 

claim to be held in abeyance, pending resolution of the remaining matters.

On March 22, 2017, the trial court ordered the claims against 

Fireman’s Fund and American Auto held in abeyance while the Isaacs pursued 

their appeal in the action against Sentinel. 

In August 2017, Fireman’s Fund and American Auto extended a joint 

settlement offer of $500,000 to the Isaacs, in exchange for a release holding both 

companies harmless. The carriers thereafter acknowledged that the $500,000 offer 
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was extended solely on behalf of Fireman’s Fund. Fireman’s Fund eventually 

agreed to pay the $500,000 UIM limits without releasing American Auto from its 

contractual obligation to pay UIM benefits and without releasing either carrier 

from the Isaacs’ bad faith and extra contractual damage claims. Fireman’s Fund 

paid its primary UIM policy limits of $500,000 on January 27, 2018. 

Following mediation on August 15, 2018, American Auto agreed to 

pay $1 million in umbrella policy limits on September 5, 2018. Because Fireman’s 

Fund and American Auto had paid the Isaacs the maximum UIM benefits under 

their policies, the remaining contractual claims were dismissed, leaving only the 

bad faith claims which had been reserved by the prior agreement of all the parties.

The trial court granted Fireman’s Fund and American Auto’s request 

to prohibit any further discovery until they had an opportunity file a motion to 

dismiss. The motion to dismiss the first amended complaint was filed on 

December 22, 2020. The Isaacs filed a response on January 4, 2021. Following 

oral arguments, the trial court entered an opinion and order granting the motion to 

dismiss. This appeal by the Isaacs followed.

Nonconformity of the Appellants’ Brief

As a preliminary matter, we agree with the appellees that the 

appellants’ brief fails to conform to several of the procedural rules set forth in 

Kentucky Rules of Civil Procedure (“CR”) 76.12, specifically, CR 76.12(4)(c)(iv) 
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which requires “ample references to the specific pages of the record . . . supporting 

each of the statements narrated in the summary[,]” and CR 76.12(4)(c)(v) which 

requires “ample supportive references to the record[,]” and a “statement with 

reference to the record showing whether the issue was properly preserved for 

review and, if so, in what manner.” The Isaacs attribute the dearth of citations to 

their inability to obtain any discovery from Fireman’s Fund and American Auto. 

There are ten volumes of record in this case, as well as numerous depositions, 

which must contain at least some material supporting the contents of the factual 

summary and arguments in the appellants’ brief. “Our options when an appellate 

advocate fails to abide by the rules are: (1) to ignore the deficiency and proceed 

with the review; (2) to strike the brief or its offending portions, CR 76.12(8)(a); or 

(3) to review the issues raised in the brief for manifest injustice only[.]” Hallis v.

Hallis, 328 S.W.3d 694, 696 (Ky. App. 2010) (quoting Elwell v. Stone, 799 S.W.2d 

46, 47 (Ky. App. 1990)). Because our standard of review, as set forth below, 

requires us to liberally construe the appellants’ allegations, we have chosen the 

first course and will ignore the deficiency.

Standard of review

The trial court dismissed the Isaacs’ first amended complaint for 

“failure to state a claim upon which relief can be granted[.]” CR 12.02(f). Such a 

dismissal may only be granted “if it appears the pleading party would not be 
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entitled to relief under any set of facts which could be proved in support of his 

claim.” Benningfield v. Pettit Environmental, Inc., 183 S.W.3d 567, 570 (Ky. App. 

2005) (internal quotation marks and citation omitted). “When ruling on the 

motion, the allegations in the pleadings should be liberally construed in a light 

most favorable to the plaintiff and all allegations taken in the complaint to be true.” 

Id. (internal quotation marks omitted). “In making this decision, the trial court is 

not required to make any factual findings. Therefore, the question is purely a 

matter of law. Accordingly, the trial court’s decision will be reviewed de novo.” 

Id. (citation omitted).

Analysis

Under the KUCSPA, an insurance company must deal in good faith 

with a claimant in determining whether the company is contractually obligated to 

pay the claimant. Mosley v. Arch Specialty Insurance Company, 626 S.W.3d 579, 

584 (Ky. 2021). In order to state a successful claim under the KUCSPA, a 

claimant “must meet a high threshold standard that requires evidence of 

‘intentional misconduct or reckless disregard of the rights of an insured or a 

claimant’ by the insurance company that would support an award of punitive 

damages.” Phelps v. State Farm Mut. Auto. Ins. Co., 736 F.3d 697, 703 (6th Cir. 

2012) (quoting Wittmer v. Jones, 864 S.W.2d 885, 890 (Ky. 1993); United Services 

Auto. Ass’n v. Bult, 183 S.W.3d 181, 186 (Ky. App. 2003)). Thus, “before the 
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cause of action exists in the first place,” there must be evidence that the insurer’s 

conduct was outrageous, “because of the defendant’s evil motive or his reckless 

indifference to the rights of others.” Wittmer, 864 S.W.2d at 890 (citations 

omitted). 

To bring a viable bad faith claim, a plaintiff must meet three specific 

requirements: 

(1) the insurer must be obligated to pay the insured’s 

claim under the terms of the policy;

(2) the insurer must lack a reasonable basis in law or fact 

for denying the claim; and

(3) it must be shown that the insurer either knew there 

was no reasonable basis for denying the claim or acted 

with reckless disregard for whether such a basis existed.

The failure to show any of these elements eliminates the 

bad-faith claim as a matter of law.

Mosley, 626 S.W.3d at 584 (citing Wittmer, 864 S.W.2d at 890). 

The Isaacs argue that the dismissal was unfounded because their first 

amended complaint plainly states causes of action for which relief may be granted 

under Kentucky law. Specifically, the complaint alleges that the defendants’ 

“conduct in refusing to pay underinsured motorist coverage benefits to [the Isaacs] 

to which they are entitled and in wrongfully refusing to pay same constitutes a 

violation of Kentucky’s Unfair Claims Settlement Practices Act, KRS 304.12-30, a

violation of [their] fiduciary obligation owed to the [Isaacs], a violation of both 
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common law and statutory bad faith law, constitutes a breach of contract and a 

violation of KRS Chapter 367 known as the Kentucky Consumer Protection Act, 

including but not limited to KRS 367.110, KRS 367.170 and KRS 367.220.”

The complaint further alleges that the conduct of Fireman’s Fund and 

American Auto “in denying underinsured motorist coverage to [the Isaacs] and 

refusing to pay underinsured motorist benefits to [the Isaacs] for their 

uncompensated damages was and remains grossly negligent, wrongful, wanton and 

in reckless disregard for the rights of [the Isaacs] such that [the Isaacs] are entitled 

to recover exemplary or punitive damages against [Fireman’s Fund and American 

Auto], in an amount to be determined at trial.”

The trial court held that the Isaacs had not been able to set forth a 

factual basis to support the second and third elements of the Wittmer test, as there 

was no allegation that their claims were ever denied by the insurers. Fireman’s 

Fund and American Auto did not deny the Isaacs’ claims but went through what 

the trial court described as the normal course of investigation and discovery before 

tendering payment. The trial court characterized the investigation and pre-trial 

discovery as reasonable and attributed any delay to the abeyance of the 

proceedings during the appellate action against Sentinel.

We agree with the trial court that there is no factual basis for the 

allegations in the complaint. The claims against Fireman’s Fund and American 
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Auto are based solely on allegations that they denied or refused to pay UIM 

benefits, yet the record plainly shows that Fireman’s Fund paid the full policy 

limits of $500,000 in January 2018, and American Auto paid the full policy limits 

of $1 million on September 2018. 

The only remaining theory of liability would be that Fireman’s Fund 

and American Auto impermissibly delayed in rendering payment, but this was 

simply never alleged in the complaint. In any event, “[m]ere delay 

of payment alone does not constitute bad faith.” Wilson v. State Farm Mut. Auto. 

Ins. Co., 795 F. Supp. 2d 604, 606-07 (W.D. Ky. 2011) (quoting Motorists Mut. 

Ins. Co. v. Glass, 996 S.W.2d 437, 452 (Ky. 1997)). In this case, the negligence of 

the tortfeasor, Baumann, and his status as an underinsured motorist, was not 

established until the release of the Isaacs’ claims against him over a year after the 

accident. The negligence of the tortfeasor must be established prior to the 

adjudication of a bad faith claim against an insurer. Wittmer, 864 S.W.2d at 891. 

Furthermore, “Kentucky law suggests that an insurer has not acted in bad faith if 

the reason for denying payment was ‘fairly debatable as to either the law or the 

facts.’” Wilson, 795 F.Supp.2d at 607 (quoting Empire Fire & Marine Ins. Co. v. 

Simpsonville Wrecker Service Inc., 880 S.W.2d 886, 890 (Ky. App. 1994)). The 

appellees have pointed out that their obligation to pay and their pro rata share of 

any UIM coverage could have been dramatically affected by the outcome of the 
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Isaacs appeal, particularly as to American Auto, which provided excess or 

umbrella coverage. 

The Isaacs nonetheless argue that the following factual issues 

preclude even a summary judgment on their statutory and common law bad faith 

claims against Fireman’s Fund and American Auto: that the companies failed to 

investigate and promptly determine their entitlement to UIM benefits; failed to 

promptly and independently evaluate the devastating and life-threatening injuries 

sustained by Darryl Isaacs and the collateral damages of Theresa Isaacs; they failed 

to promptly offer any amount of UIM benefits until years later when they were 

ultimately required; they failed to respond to numerous demands for UIM benefits 

or offer any explanation for their refusal to pay; they wrongfully required the 

Isaacs to institute litigation in order to obtain their benefits; they fraudulently 

attempted to obtain a release of the Isaacs’ claims to UIM by offering only 

$500,000, which was the limit of only the Fireman’s Fund policy; and that

Fireman’s Fund failed to pay UIM until more than 2 1⁄2 years after the accident and 

American Auto failed to pay until more than 3 1⁄2 years after the accident. These 

claims all relate to an alleged delay in payment, a claim which was never pled in 

the complaint, and are beyond the scope of our review.
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Conclusion

Because the trial court’s decision in this matter was well-founded as a 

matter of law, its opinion and order dismissing the bad faith claims of the 

appellants is affirmed.

McNEILL, JUDGE, CONCURS.

CETRULO, JUDGE, CONCURS IN RESULT ONLY.

BRIEFS FOR APPELLANTS:

Lee E. Sitlinger

Carolyn Ely

Louisville, Kentucky

BRIEF FOR APPELLEES:

Christopher Burnside

Christopher Johnson

Griffin Terry Sumner

Samuel Wardle

Louisville, Kentucky